Latest / Best of Business / Sam Dickie: Fisher Funds expert on Microsoft, Amazon, Alphabet and Meta reporting their earnings

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Sam Dickie: Fisher Funds expert on Microsoft, Amazon, Alphabet and Meta reporting their earnings · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks B Follow
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  Speaker 2: Four of the biggest companies in the world, Microsoft, Amazon, Alphabet,
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  Speaker 2: and Meta have all reported earnings a few hours ago.
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  Speaker 2: Sam Dickey from Fisher Funds has the details and is
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  Speaker 2: with us now, Hi, Sam, Hey, Heather Now all four
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  Speaker 2: seem to beat earnings. Was there a clear winner though?
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  Speaker 3: Yes, all beat expectations, and those expectations were pretty lofty too.
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  Speaker 3: They beat on revenue and profits, but Google and Amazon
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  Speaker 3: really smashed expectations, and while Meta they did beat, as
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  Speaker 3: you said, they lifted their future expected capital expenditure, which
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  Speaker 3: has become a bit of a dirty phrase. So the
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  Speaker 3: winner on the day was probably Amazon or Google.
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  Speaker 2: What do you think was the biggest surprise?
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  Speaker 3: There was probably two things. So firstly, profit margins were solid,
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  Speaker 3: and the second one was the expectation for abnormally strong
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  Speaker 3: amidst what is normally pretty strong AI related future demand.
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  Speaker 3: So on margins, recall you and I have talked about
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  Speaker 3: the market getting nervous that revenue is rising. No doubt
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  Speaker 3: revenue has been rising for these companies, but margins were
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  Speaker 3: slipping and that trend reversed this quarter, so that was important.
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  Speaker 3: And the second thing was that the visibility on future
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  Speaker 3: AI related demand is astonishing. So Amazon's cloud backlog, which
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  Speaker 3: is basically customers booked and to move workloads to the
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  Speaker 3: cloud or do work in their clouds, has gone from
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  Speaker 3: two hundred billion a couple of quarters ago to three
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  Speaker 3: hundred and sixty billion, and Google's cloud backlog nearly doubled
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  Speaker 3: in a single quarter to almost five hundred billion. So
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  Speaker 3: it's almost a trillion dollars of contracted future cloud revenue,
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  Speaker 3: largely AI related, between just those two companies. So for
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  Speaker 3: anyone worried about an AI bubble bursting near term, it's
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  Speaker 3: probably a pretty inconvenient data point.
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  Speaker 2: And I see all of these companies are pushing their
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  Speaker 2: homegrown computer chip's hard right, their own ones. What's going
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  Speaker 2: on there?
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  Speaker 3: Yeah, that's that's sort of a less well known facts.
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  Speaker 3: So we've all heard a lot about in video and
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  Speaker 3: others supplying their more generic advanced computer chips to power
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  Speaker 3: the AI boom. But Amazon and Google in particular are
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  Speaker 3: having huge success with their own home grown customs silicon
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  Speaker 3: as it's called computer chips, so they're cheaper to run
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  Speaker 3: and they're obviously optimized for precisely the work that Amazon
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  Speaker 3: and Google do, So that means these companies can move
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  Speaker 3: faster than competitors and drive their profit margins harder.
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  Speaker 2: What do you think this all means for investors then, Sam.
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  Speaker 3: I think the blank check era that we talked about
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  Speaker 3: for ais over and the market's now rewarding return on
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  Speaker 3: that spend. So I think the market will breath a
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  Speaker 3: big side relief that all these big companies are growing
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  Speaker 3: super fast and their profit margins are super healthy. So
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  Speaker 3: if that's sustainable, I think that's a big shift.
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  Speaker 2: Sam, it's good to talk to you, always is. We'll
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  Speaker 2: talk to you in a week's time. Sam Dickey Official.
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